Payroll Processing | Industry Lingo

Automatic Check Signatures

This feature offered by payroll service providers prints a computer-generated signature on each check. It is particularly useful for larger businesses that have many checks to sign, or in cases where the check signer is frequently out of the office.

Certified Payroll Professional (C.P.P.)

This is a certification given by the American Payroll Association upon passing a standardized examination.

Direct Deposit

A popular option of payroll companies that allows payroll funds to be deposited directly into employee bank accounts.

EFTPS

The Electronic Federal Tax Payment System (EFTPS) was implemented in October 1996 in accordance with NAFTA (North American Free Trade Agreement) which stipulated that any business that pays more that $200,000 in taxes in any year from 1998 on must pay taxes electronically starting within two years from when they hit the $200,000-in-taxes mark.

FICA/FUTA

Taxes paid to the federal government that support Medicare, Social Security, and unemployment funds. While the costs of Medicare and Social Security are shared equally between the employee and the company, FUTA taxes are borne by the company alone.

Float

The interest income that is accrued between the time the payroll service transfers funds into its account and the time when payroll checks and taxes are actually paid. Firms with large payrolls should carefully consider the lost revenue due to float when choosing a provider. Read more about how payroll companies make money and the coast of float.

Outsourcing

Enlisting a payroll service provider to process your payroll, as opposed to handling it internally.

Tax Filing

The most popular add-on service offered by payroll service providers. With this service, a provider agrees to file your company's payroll taxes.

The more insight you have on the profit source of payroll providers, the better you can choose an appropriate provider. Done wisely, you can save some money and then re-invest your savings back into your own business.

There's more to learn about payroll services than just terminology! Read our Payroll Services Buyer's Guide for detailed advice that takes you through every stage of the purchasing process or instantly learn what different payroll service providers can offer your business by comparing their services side-by-side.